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RiskFirst research shows that up to 10% of the FTSE
100 companies that support defined benefit pension schemes could
benefit from changes to the IAS19 accounting standard.

Research released today by RiskFirst highlights that as many
as 10% of the FTSE 100 may benefit from changes by the
International Accounting Standards Board (IASB) to the IAS19
standard.

It has been widely reported that the key changes - which include
removing the current expected return on scheme assets income
statement credit and replacing it with interest on the scheme
assets at the AA-rated discount rate - would reduce company profits
significantly once implemented.

However, this may not necessarily be the case and will depend on
the types of assets that schemes are invested in. For those schemes
with lower risk investment portfolios, it is quite possible that
the returns expected on their scheme assets are below the yield on
a AA-rated corporate bond. In these cases - which account for
around 10% of the FTSE 100 - the income statement charge for
pensions will become lower once the accounting changes are applied,
resulting in increased profits.

"Some schemes are now in a position where they have de-risked
their assets to more closely match their liabilities," says Matthew
Furniss, an Assistant Vice President at RiskFirst. "As a result
of being invested predominantly in lower risk assets such as gilts
- which may not be expected to yield the same levels as highly
rated corporate bonds - such companies will therefore experience
increased profits as a result of the accounting changes. This can
only incentivise more de-risking within the pensions industry."